Correlation Between Brookfield Asset and Ares Management
Can any of the company-specific risk be diversified away by investing in both Brookfield Asset and Ares Management at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Brookfield Asset and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Asset Management and Ares Management LP, you can compare the effects of market volatilities on Brookfield Asset and Ares Management and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Brookfield Asset with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Asset and Ares Management.
Diversification Opportunities for Brookfield Asset and Ares Management
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brookfield and Ares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Asset Management and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and Brookfield Asset is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Brookfield Asset Management are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management LP has no effect on the direction of Brookfield Asset i.e., Brookfield Asset and Ares Management go up and down completely randomly.
Pair Corralation between Brookfield Asset and Ares Management
Considering the 90-day investment horizon Brookfield Asset is expected to generate 4.06 times less return on investment than Ares Management. In addition to that, Brookfield Asset is 1.14 times more volatile than Ares Management LP. It trades about 0.07 of its total potential returns per unit of risk. Ares Management LP is currently generating about 0.33 per unit of volatility. If you would invest 17,108 in Ares Management LP on October 20, 2024 and sell it today you would earn a total of 2,024 from holding Ares Management LP or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Asset Management vs. Ares Management LP
Performance |
| Timeline |
| Brookfield Asset Man |
| Ares Management LP |
Brookfield Asset and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Asset and Ares Management
The main advantage of trading using opposite Brookfield Asset and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Asset position performs unexpectedly, Ares Management can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ares Management will offset losses from the drop in Ares Management's long position.| Brookfield Asset vs. KKR Co LP | Brookfield Asset vs. Blackstone Group | Brookfield Asset vs. Apollo Global Management | Brookfield Asset vs. T Rowe Price |
| Ares Management vs. KKR Co LP | Ares Management vs. Carlyle Group | Ares Management vs. Blackstone Group | Ares Management vs. Blue Owl Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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